The Week - Why Modern Monetary Theory is an Unserious Idea for an Unserious Time
- MMTers might dislike like the comparison, but their model is the lefty version of the Laffer Curve, the beloved economic construct of GOP tax-cutting "supply-siders." Like MMTers, the most ardent supply-siders take a simple economic observation — about tax rates and tax revenue — to make a big conceptual leap — that tax cuts pay for themselves. Also like Lafferistas, MMT don't much sweat deficits and debts. (In a bit of cheeky cosmic coincidence, it was Arthur Laffer himself who played matchmaker among some early MMT theorists.) And although that may not be how leading MMT-loving academics, such as former Bernie Sanders economic advisor Stephanie Kelton, see things — they stress MMT does have financial limits — the nuances may get lost on politicians and #Resistance folks.
Epsilon Theory: Modern Monetary Theory or: How I Learned to Stop Worrying and Love the National Debt
- Modern Monetary Theory – which is neither modern nor a theory – is a post hoc rationalization of political expediency and power-expanding action.
It makes us feel better about all the bad stuff we’ve done with money and debt for the political efficacy of Team Elite.
And all the bad stuff we’re going to do.
Eyes on the ball here - we've gone from "70% marginal tax rate" to "Laffer Curve" in the space of a week. There's a fair amount of messaging going on and the message is fundamentally "people who want big social programs are delusional."
The note under the note, however, is interesting. We're experiencing a big shift in the thinking on "how money works." At the end of the day, economics is a ledger we all choose to believe in. This whole "capitalize the gains, socialize the losses" approach to capitalism might be running aground.
Hold onto your butts.
Wait, help me out here - wasn’t Piketty arguing for something like that marginal tax rate? Did he not take the behavioral consequences into account or was it something fundamentally different? It’s not like a marginal tax rate on labor is the only way to get money from the rich. And what exactly about MMT makes you think it will fundamentally alter things, instead of being just another ineffective / destructive approach like QE?
The problem isn't the marginal tax rate. The problem with MMT is that it takes, as its base assumption: Fundamentally, it's an institutionalization of "too big to fail" - that it doesn't really matter if Moody's downgrades the debt of the United States which causes the price of bonds to go up which causes borrowing costs for everyone to skyrocket because the United States can always print more money and in the end, it doesn't matter where the decimal point is, it matters where the jobs are. Now - it's important to note that nobody serious is saying "debt unending forever and ever amen". AOC and her 70% marginal tax rate isn't saying "let's spend money forever" she's saying "tax the rich and boons for the poor." But when Obama bumped the debt up something crazy in response to the recession, his spokescritters all had some variation of "debt is overblown" to soothe the talking heads with. "debt is overblown" is every bit as panic-inducing as "gay marriage bakery" and "death panels" to the 'wingers so they're getting themselves spun up into a tizzy over this whole "modern monetary theory" thing well ahead of anyone saying anything more than "I think it should absolutely be a part of the conversation" (which Ocasio-Cortez said to 60 minutes). Everything else she said? That's getting buried. "You recognize that people still ask the question as though I didn't just answer it," she told INSIDER. "Because it's not an interest in the actual answer. It's an interest in the attack and it's an interest in debasing the agenda." Really, the Left is basically saying "European-style taxes" and the Right is trying to pretend they said "Laffer curve." But I think it's interesting that we're now in the weeds of "what is money, anyway?" considering Occupy Wall Street and the bank bailout is what launched Bitcoin in the first place. When finance is demonstrated to work differently for institutions than for individuals, individuals resort to alternative markets....that sovereign governments have an unlimited financial ability to pay for the things they wish to purchase and to fulfill promised future payments. MMT claims that these governments also have an unlimited ability to provide funds to other sectors, and that because of this, it is not possible for a government that issues its own currency to be bankrupt.
"You can pay for it by saving costs on expenditures that we're already doing," she said. "We can do it by saving money on military spending. We can pay for it by raising taxes on the very rich. We can pay for it with a transaction tax. We can pay for it with deficit spending."